Jim Cramer: Target's (TGT) Deal With CVS Health Should Boost Gross Margins

NEW YORK (TheStreet) -- Shares of Target Corp (TGT) were gaining, higher by 1.02% to $81.27 in early market trading Tuesday, one day after the big box retailer agreed to sell its pharmacy and clinic businesses to CVS Health  (CVS) for roughly $1.9 billion.

Last night, Target CEO Brian Cornell and CVS Health president and CEO Larry Merlo appeared on Jim Cramer's Mad Money show on CNBC.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio said this is a win-win deal, and should boost Target's gross margins. 

Cornell said the deal is all about growth for the company, and will strengthen its positioning in the wellness space.

He added that the deal will drive traffic to Target stores and return cash to shareholders. The deal would also increase Target's focus on signature product categories.

CVS will buy more than 1,660 Target pharmacies in 47 states.

The two companies said the pharmacies and clinics will be run through a store-within-a-store format, and will remain in Target stores under the CVS brand.

Minneapolis-based Target is a retailer that provides differentiated merchandise at discounted prices.

Insight from TheStreet's Research Team:

Bryan Ashenberg and Bob Lang, Portfolio Co-managers mentioned Target on TrifectaStocks.com. Here's a snippet of what they had to say in a recent post:

This morning, news hit that model portfolio holding CVS Health  (CVS) will acquire Target's (TGT) pharmacy and health clinic businesses for about $1.9 billion.

CVS will operate the stores as a store within a store, and rebrand Target's health clinics as MinuteClinics. The companies also agreed to jointly develop five to 10 small, flexible format stores over a two-year period that will be branded as a TargetExpress store and include a CVS pharmacy.

- Bryan Ashenberg and Bob Lang, ' The Target Deal Is Bullish for CVS ' originally published 6/15/2015 on TrifectaStocks.com.

Want more information like this from Bryan Ashenberg and Bob Lang BEFORE your stock moves? Learn more about TrifectaStocks.com now.

Separately, TheStreet Ratings team rates TARGET CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TARGET CORP (TGT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company shows low profit margins."

You can view the full analysis from the report here: TGT Ratings Report

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